RBI tightens daily borrowing norms to check rupee downslide

The Reserve Bank of India (RBI) has came out with yet another set of measures to squeeze liquidity in a move to halt the Indian rupee's (INR) free fall against the US dollar (USD). The central bank has tweaked some borrowing measures by banks, which is likely to make money costlier by raising demand for the rupee.

RBI has restricted the limit of individual bank borrowing to 0.50% of its total deposits (or net demand and time liability) outstanding as on the last Friday of the second preceding fortnight from the RBI's daily borrowing window called Liquidity Adjustment Facility (LAF).

Also, the cash reserve ratio (CRR) or the portion of deposits banks keep with the RBI, stands at 4%. Banks generally maintain a minimum 70% of total CRR obligation on an average daily basis during a fortnight. However, it needs to be adjusted by the end of a fortnight to maintain 100%. In a fresh move, RBI has increased the daily average requirement from 70% to 99%.

Source : Equity Bulls

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